Scaling-Up SMEs Survival in Emerging Markets: The Forensic Approach

Abstract

This study investigates the usefulness of forensic accounting in scaling up the survival of SMEs by means of fraud detection, reduction and prevention using the Nigerian scenario. The study sample is made up of 315 SMEs Owners in Imo state, River state, Enugu State, Anambra State, Delta state and 222 professional Accountants in Nigeria, making a total of 537 respondents.  The data for our study were gathered using questionnaires administered on physical contact with respondents, phone interviews and online e-questionnaires arranged in five Point Likert-Scales. Z-test method was used as statistical tool for hypotheses tests at 5% significance level. Evidence generated reveals forensic accounting has significant effect in unmasking sophisticated fraudulent activities in SMEs. Conclusively, forensic accounting has been shown to be very useful in detecting, reducing and preventing fraud which is the root-cause of business failure in emerging markets, yet, barely-recognised at that level. Given that SMEs are considered the engine of growth and development in an economy, greater attention needs to be paid to tackling the issue of high SME mortality rates. By recommendation, the Owners of SMEs should introduce forensic accounting in their system when necessary or in a pattern of once yearly for first three years in operation and then reduced to perennially after three years and later on increased to five years. It is further recommended that Organisations providing financial support to SMEs internationally and locally like Jumia, United Nations (UN) and even financial institutions and Government should provide basic education on the dangers of fraud to the SMEs and add a forensic Accountant's report as additional criteria to SMEs funding support in the third year.